Do you need a fractional CFO NOW? Maybe not. But you do need to build your finance function. As a small business, you tend to manage your finances on spreadsheets. You further graduate to accounting software, while still using spreadsheets. You will soon add multiple systems like an expense management system, payroll software, and you have your spreadsheets as well. At this point, you need “finance support” to take care of the multiple systems. Are you ready to hire a fractional CFO? Getting a good bookkeeper is hygiene, but that doesn’t solve the core problem. Bookkeeping and Fractional CFO are not the only two choices. There is a gap between monthly maintenance of books and the need for CFO-level strategic support. As the business grows, one needs to make sure the books are maintained accurately, the monthly close process is reliable and monthly financial numbers are available on time for decision making. Eventually, you will want the financial information to be connected to operations to give you the actual financial picture of the organization. That’s the finance function! Building your finance function intelligently for scalability is key to leverage the strategic support of the CFO, when you are ready to hire for the role. Here are some recommendations for small business owners who are not ready to hire fractional CFO: 1. Choose systems that can talk to each other Get accounting software that has a wide range of connectors and API capabilities. 2. System integration should be a primary requirement When you decide to invest in systems like bill management, expense management, or payroll, make sure they are systems that have the ability to talk to your accounting software. You should make interconnected systems a priority, and it should not be just Excel-based report downloads. 3. Automate the workflows that you repeat To give you an example, if vendors send bills to you via email, have them send the bills to a finance-specific email address and automate the entry of the bill into the accounting system. 4. Establish a disciplined monthly close process that is scalable Hire a tech-enabled finance team to run your monthly processes. It will save you tons of data-entry man-hours. Reserve human effort for reviews and decision-making. When you are ready, your operational data can be connected to your financial data to answer key business questions. Hire a team that is capable of providing you with a financial summary every month as a part of the close process, can take you to the next level when you need investor reports, and can support you when you want financial analysis on your operational data. 5. Define your financial reports and build documentation Small businesses have a P&L, but that is not all you would always need for decision-making. Do you need cash-flow forecasts? How do you determine the ROI for your projects? Is your biggest customer a profitable one for you? Build documentation for the month-end close process, approvals, reporting, etc. Don’t let critical processes live in someone’s head. The key is to choose systems, processes, and finance support that give you what you need today while creating a foundation for what you’ll need tomorrow. However small you are, you do need to build your finance department the right way to avoid the rework and rebuilding later.redacted